U.S. Golf Club Manufacturer Carries A ... : Big Stick

TOKYO — In this golf-crazy land, the Biggu Basa may be the ultimate American import success story.

The Biggu Basa-- as the Japanese have dubbed the Big Bertha golf club made by Carlsbad, Calif.-based Callaway Golf Co.-- draws much praise here.

"When you hit a ball that's on the ground, it's easy for it to go too low or off to the side. But if you use the Big Bertha, the ball goes up and falls," explained Masayuki Kamioka, a businessman recently found inspecting clubs at a discount golf shop here.

Nobukazu Sakai, an architecture office employee who also works as a golf instructor, said Big Bertha's oversized head gives the club an extra-large "sweet spot," so that "the ball flies in the right direction and goes a long distance."

But perhaps Big Bertha is a tad too successful for Callaway, which recently drew the wrath of some Japanese golf enthusiasts for what Callaway representatives say was a simple attempt to block fakes imported from Taiwan.

The crackdown also netted unauthorized importers of real Big Berthas. These so-called parallel importers were helping to meet soaring demand--and, in a small way, reduce Japan's trade surplus with the United States--all at a lower cost to Japan's famously eager golfers.

Last year, Callaway's official distributor, Sumitomo Rubber Industries Ltd., imported 180,000 Callaway clubs, modified slightly for the Japanese market. But another 150,000 standard Callaway clubs were purchased in the United States by independent importers and brought to Japan for resale at prices lower than those charged for Sumitomo's imports.

And, unhappily for Callaway, in recent years some Taiwan-based manufacturers have managed to get about 10,000 fake "Big Berthas" a year into Japan.

When Callaway convinced Japanese customs officials to crack down on counterfeits earlier this year, some Japanese smelled a scandal.

Customs officials in January suddenly blocked the import of all Callaway clubs except those handled directly by Sumitomo or other importers who had obtained Callaway's express permission.

Big Bertha drivers imported through Sumitomo were selling at the time for about $500 each. But independent traders could get them for $200 or less in the United States and resell them here at much lower markups. To many, the action by customs looked like a blatant attempt to shut down sales of the cheaper parallel-import Big Berthas in order to maintain high-priced monopoly sales through Sumitomo.

Japanese magazines that had praised "Big Berthas" exploded with angry articles.

"The True Facts and the Repercussions of the Stopping of Callaway Parallel Imports! Will You Never Have Another Chance To Get Parallel Import Big Berthas!?" screamed a headline in Par Golf magazine.

"Callaway Moves to Destroy Parallel Imports," declared Nikkei Trendy, a magazine specializing in coverage of popular new products. "Imports are Stopped by using Patent Rights as a Shield."

Yasuo Nakagawa, Callaway's Tokyo lawyer, said in an interview that the entire uproar resulted from Callaway's determination to stop the import of fake clubs to Japan.

Under Japanese law and customs procedures, he said, once Callaway exercised its Japanese-registered "design patent" rights on Big Bertha clubs to get fakes blocked, customs began stopping all parallel imports. Basically, he said, it is too troublesome and time-consuming for customs officials to differentiate genuine clubs handled by parallel importers from the fakes.

"You could say that, in a way, Callaway is choking its own throat," Nakagawa said.

The stopping of parallel imports will cut Callaway's total sales significantly, he acknowledged. "Actually, some factory orders have already been canceled in the United States. But Callaway put precedence on its design patent right," he said.

The action by customs' officials came as a shock to parallel importers.

"A total of 500 Big Berthas we tried to import were stopped at customs," said an independent importer who spoke on condition of anonymity.

"At first, we didn't know what had happened, because we were importing real American products, not fakes," he said. These clubs were being imported for clients who "were planning to sell Big Berthas, and had already advertised them . . . . They were using Big Bertha as an 'eye catch' for sales, so it was very important to them to get them. So this caused big trouble for them."

Callaway took what it figured was a reasonable approach to this problem: Independent importers could bring in clubs stopped by customs, Nakagawa said, if they promised to discontinue such imports in the future and paid 2,000 yen--about $19 per club--in "damages" to reimburse the time and expense of a Callaway representative visiting the customs office to handle the procedures.